10-K 1 d16501_10-k.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004
Commission File Number: 1-12762

MID-AMERICA APARTMENT COMMUNITIES, INC.

(Exact Name of Registrant as Specified in Charter)

TENNESSEE
               
62-1543819
(State of Incorporation)
               
(I.R.S. Employer Identification Number)
 

6584 POPLAR AVENUE, SUITE 300
MEMPHIS, TENNESSEE 38138
(Address of principal executive offices)

(901) 682-6600
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class
          Name of Exchange
on Which Registered
Common Stock, par value $.01 per share
               
New York Stock Exchange
Series F Cumulative Redeemable Preferred Stock, par value $.01 per share
Series H Cumulative Redeemable Preferred Stock, par value $.01 per share
               
New York Stock Exchange
New York Stock Exchange
 

Securities registered pursuant to Section 12 (g) of the Act:
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   [X] Yes  [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).   [X] Yes [  ] No

The aggregate market value of the voting stock held by non-affiliates of the Registrant, (based on the closing price of such stock ($37.89 per share), as reported on the New York Stock Exchange, on June 30, 2004) was approximately $721,500,000 (for purposes of this calculation, directors and executive officers are treated as affiliates).

The number of shares of the Registrant’s common stock outstanding as of February 28, 2005, was 21,058,126 shares, of which approximately 1,301,843 were held by affiliates.

The Registrant’s definitive proxy statement in connection with the 2005 Annual Meeting of Shareholders (to be filed pursuant to Regulation 14A) is incorporated by reference into Part III of this Annual Report on Form 10-K.


MID-AMERICA APARTMENT COMMUNITIES, INC.
TABLE OF CONTENTS

Item
         
     Page
 
               
PART I
                    
 
1.
               
Business
           2    
2.
               
Properties
           6    
3.
               
Legal Proceedings
           13    
4.
               
Submission of Matters to Vote of Security Holders
           13    
 
 
               
PART II
                    
5.
               
Market for Registrant’s Common Equity and Related Stockholder Matters
           13    
6.
               
Selected Financial Data
           15    
7.
               
Management’s Discussion and Analysis of Financial Condition and Results of Operations
           17    
7A.
               
Quantitative and Qualitative Disclosures About Market Risk
           29    
8.
               
Financial Statements and Supplementary Data
           30    
9.
               
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
           30    
9A.
               
Controls and Procedures
           30    
9B.
               
Other Information
           31    
 
 
               
PART III
                    
10.
               
Directors and Executive Officers of the Registrant
           32    
11.
               
Executive Compensation
           32    
12.
               
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
           32    
13.
               
Certain Relationships and Related Transactions
           32    
14.
               
Principal Accountant Fees and Services
           32    
 
 
               
PART IV
                    
15.
               
Exhibits, Financial Statement Schedules and Reports on Form 8-K
           33    
 

PART I

ITEM 1.     BUSINESS

WEBSITE ACCESS OF REGISTRANT’S REPORTS

A copy of this Annual Report on Form 10-K, along with the Company’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to the aforementioned filings, are available on the Company’s website free of charge. The filings can be found on the Investors’ page under SEC Filings. The Company’s website also contains its Corporate Governance Guidelines, Code of Ethics Policy and the charters of the committees of the Board of Directors. These items can be found on the Investors’ page under Corporate Governance. The Company’s website address is www.maac.net. Reference to the Company’s website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this document. All of the aforementioned materials may also be obtained free of charge by contacting the Investor Relations Department at Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Suite 300, Memphis, TN 38138.

OVERVIEW OF THE COMPANY

Founded in 1994, Mid-America Apartment Communities, Inc. (the “Company”) is a Memphis, Tennessee-based self-administered and self-managed umbrella partnership real estate investment trust (“REIT”) that focuses on acquiring, owning and operating apartment communities. Between 1994 and December 31, 2004, the Company increased the number of properties of which it is the sole owner from 22 to 129 properties with 36,618 apartment units, representing an increase of 31,038 apartment units. The Company is also participating in two joint ventures with Crow Holdings, Mid-America CH/Realty LP and Mid-America CH/Realty II LP (collectively the “Joint Ventures”). The Joint Ventures owned three properties with 1,286 apartment units at December 31, 2004. The Company retains a 33.33% ownership interest in each of the Joint Ventures and is paid a management fee of 4% of revenues from the apartment communities owned by the Joint Ventures.

The Company’s business is conducted principally through Mid-America Apartments, L.P. (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership, holding 225,820 common units of partnership interest (“Common Units”) comprising a 1% general partnership interest in the Operating Partnership as of December 31, 2004. The Company’s wholly-owned qualified REIT subsidiary, MAC II of Delaware, Inc., a Delaware corporation, is a limited partner in the Operating Partnership and, as of December 31, 2004, held 19,622,605 Common Units, or 86.89% of all outstanding Common Units.

The Company operated apartment communities in 12 states in 2004, employing 1,121 full time and 84 part time employees at December 31, 2004.

OPERATING PHILOSOPHY

The Company’s primary objective is to maintain a stable cash flow that will fund its dividend through all parts of the real estate investment cycle. The Company focuses on growing through its existing investments and, when accretive to cash flow and shareholder value, through external investments.

INVESTMENT FOCUS.    The Company’s primary investment focus is on apartment communities in the Southeastern United States and Texas. Between 1994 and 1997, the Company grew largely through the acquisition and redevelopment of existing communities. Between 1998 and 2000, its concentration was on development of new communities. The Company’s present focus is on the acquisition of properties that it believes can be repositioned with appropriate use of capital and its operating management skills. The Company is also interested in increasing its investment in properties in larger and faster growing markets within its current market area to balance its portfolio between small, middle and large-tier markets, and intends to do this through acquiring apartment communities with the potential for above average growth. The Company will continue its established process of selling mature assets, and will adapt its investment focus to opportunities and markets.

HIGH QUALITY ASSETS.    The Company maintains its assets in excellent condition, believing that continuous maintenance will lead to higher long-run returns on investment. It believes that being recognized

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by civic and industry trade organizations for the high quality of its properties, landscaping, and property management will lead to higher rents and profitability and further supports the high quality of its properties and operations. The Company periodically sells assets selectively in order to ensure that its portfolio consists primarily of high quality, well-located assets within its market area.

DIVERSIFIED MARKET FOCUS.    The Company believes the stability of its cash flow is enhanced and it will generate higher risk adjusted cash flow returns, with lower volatility, through its diversified strategy of investments over large, middle and small-tier markets throughout the southeastern United States and Texas.

INTENSIVE MANAGEMENT FOCUS.    The Company strongly emphasizes on-site property management. Particular attention is paid to opportunities to increase rents, raise average occupancy rates, and control costs. Property managers and regional managers are given the responsibility for monitoring market trends and the discretion to react to such trends. The Company, as part of its intense management focus, has established a number of training programs to produce highly competent property managers, leasing consultants and service technicians who work on-site at the Company’s apartment communities (the “Communities”) to generate the highest possible income from the Company’s assets. At December 31, 2004, the Company employed approximately 106 Certified Apartment Managers (“CAM”). The CAM designation is sponsored through the National Apartment Association and provides training for on-site manager professionals.

DECENTRALIZED OPERATIONAL STRUCTURE.    The Company operates in a decentralized manner. Management believes that its decentralized operating structure capitalizes on specific market knowledge, provides greater personal accountability than a centralized structure and is beneficial in the acquisition and redevelopment processes. To support this decentralized operational structure, senior and executive management, along with various asset management functions, are proactively involved in supporting and reviewing property management through extensive reporting processes and frequent on-site visitations. In 2004 the Company completed the installation of the property and general ledger modules of a new web-based property management system that increases the amount of information shared between senior and executive management and the properties, and does so on a real time basis, improving the support provided to the operating environment. The Company plans to install the purchase order module in 2005.

PROACTIVE BALANCE SHEET AND PORTFOLIO MANAGEMENT

The Company focuses on maximizing the return on assets and adding to the intrinsic underlying value of each share of the Company’s common stock, routinely reviewing each asset based on its determined value and selling those which no longer fit its investment criteria. The Company constantly evaluates the effectiveness of its capital allocations and makes adjustments to its strategy, including investing in existing and new apartment communities, debt retirement, and repurchases or issuances of shares of the Company’s preferred and common stock.

STRATEGIES

The Company seeks to increase operating cash flow and earnings per share to maximize shareholder value through a balanced strategy of internal and external growth.

OPERATING GROWTH STRATEGY.    Management’s goal is to maximize the Company’s return on investment in each Community by increasing rental rates and reducing operating expenses while maintaining high occupancy levels. The Company seeks higher net rental revenues by enhancing and maintaining the competitiveness of the Communities and managing expenses through its system of detailed management reporting and accountability in order to achieve increases in operating cash flow. The steps taken to meet these objectives include:

•  
   empowering the Company’s property managers to adjust rents in response to local market conditions and to concentrate resident turnover during peak rental demand months;

•  
   offering new services to residents, including telephone, cable, and internet access, on which the Company generates fee and commission income;

•  
   implementing programs to control expenses through investment in cost-saving initiatives, such as the installation of individual apartment unit water and utility meters in certain Communities;

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•  
   analyzing individual asset productivity performances to identify best practices and improvement areas;

•  
   improving the “curb appeal” of the Communities through extensive landscaping and exterior improvements and repositioning Communities from time to time to maintain market leadership positions;

•  
   compensating employees through performance-based compensation and stock ownership programs;

•  
   maintaining a hands-on management style and “flat” organizational structure that emphasizes senior management’s continued close contact with the market and employees;

•  
   selling or exchanging underperforming assets and repurchasing or issuing shares of common and preferred stock when cost of capital and asset values permit;

•  
   allocating additional capital where the investment will generate the highest returns for the Company; and

•  
   developing new ancillary income programs aimed at delivering new consumer services and products to its residents while generating fee income for the Company.

JOINT VENTURE STRATEGY.    One of the Company’s strategies is to co-invest with private capital partners in joint venture opportunities from time to time which enable it to obtain a higher return on its investment through management fees, which leverages the Company’s recognized skills in acquiring, repositioning, redeveloping and managing multifamily investments. In addition, the joint venture investment strategy can provide a platform for creating more capital diversification and lower investment risk for the Company. The Company is currently involved in two joint ventures with Crow Holdings, one established in 2002 and the second in early 2004.

DISPOSITION STRATEGY.    The Company is committed to the selective disposition of mature assets, defined as those apartment communities that no longer meet the Company’s investment criteria and long-term strategic objectives. Typically, the Company selects assets for disposition that do not meet its present investment criteria including future return on investment, location, market, potential for growth, and capital needs. The Company may from time to time also dispose of assets for which the Company receives an offer meeting or exceeding its return on investment criteria even though those assets may not meet the disposition criteria disclosed above.

The following Communities were sold during 2004:

Property
          Location
      Number
of Units
      Date Sold
100% Owned Properties:
                                                                      
Island Retreat
               
St. Simon’s Island, GA
           112         
October 1, 2004
 
Joint Venture Properties:
                                                                      
Preserve at Arbor Lakes
               
Jacksonville, FL
           284         
November 3, 2004
 
               
 
           396                        
 

ACQUISITION STRATEGY.    One of the Company’s growth strategies is to acquire and redevelop apartment communities that meet its investment criteria and focus as discussed above. The Company has extensive experience and research-based skills in the acquisition and repositioning of multifamily properties. In addition, the Company will acquire newly built and developed properties that can be purchased on a favorable pricing basis. The Company will continue to evaluate opportunities that arise, and will utilize this strategy to increase the number of properties in strong and growing markets in the Southeast and Texas.

4


The following Communities were purchased during 2004:

Property
          Location
      Number
of Units
      Date Purchased
100% Owned Properties:
                                                                      
Monthaven Park
               
Hendersonville, TN (Nashville Metro)
           456         
January 23, 2004
Watermark
               
Roanoke, TX (Dallas Metro)
           240         
June 15, 2004
Prescott
               
Duluth, GA (Atlanta Metro)
           384         
August 24, 2004
Grand Reserve at Sunset Valley
               
Austin, TX
           210         
November 5, 2004
Preserve at Coral Square
               
Coral Springs, FL (Ft. Lauderdale Metro)
           480         
November 5, 2004
Villages at Kirkwood
               
Stafford, TX (Houston Metro)
           274         
November 5, 2004
 
Joint Venture Properties:
                                                                      
Verandas at Timberglen
               
Dallas, TX
           522         
January 15, 2004
 
               
 
           2,566                       
 

DEVELOPMENT STRATEGY.    In late 1997, the Company’s emphasis shifted from acquisitions to development because of its belief that under then-current market conditions, such development would generate higher quality assets and higher long-term investment returns. In 2002, the Company completed a $300 million construction program of high quality apartments in several markets. In 1999, management decided to exit the construction and development business upon completion of the Company’s existing development pipeline after determining that market conditions were changing, making it unlikely that future proposed projects would meet the Company’s profitability targets over the next few years.

At December 31, 2004, the Company had no properties in development. The Company periodically evaluates opportunities for profitable future development investments.

COMMON AND PREFERRED STOCK

The Company continuously reviews opportunities for lowering its cost of capital, and increasing value per share. The Company evaluates opportunities to repurchase stock when it believes that its stock price is below the value of its assets and accordingly repurchased common stock, funded by asset sales, between 1999 and 2001. The Company also looks for opportunities where it can acquire or develop communities, selectively funded or partially funded by stock sales, when it will add to shareholder value and the investment return is projected to substantially exceed its cost of capital. The Company will also opportunistically seek to lower its cost of capital through refinancing preferred stock as it did in 2003.

SHARE REPURCHASE PROGRAM

In 1999, the Company’s Board of Directors approved an increase in the number of shares of the Company’s common stock authorized to be repurchased to 4 million shares. As of December 31, 2004 the Company had repurchased a total of approximately 1.86 million shares (8% of the shares of common stock and Common Units outstanding as of the beginning of the repurchase program). From time to time the Company intends to sell assets based on its disposition strategy outlined in this Annual Report and use the proceeds to repurchase shares when it believes that shareholder value is enhanced. Factors affecting this determination include the share price, asset dispositions and pricing, financing agreements and rates of return of alternative investments. No shares were repurchased from 2002 through 2004 under this plan.

COMPETITION

All of the Company’s Communities are located in areas that include other apartment communities. Occupancy and rental rates are affected by the number of competitive apartment communities in a particular area. The owners of competing apartment communities may have greater resources than the Company, and the managers of these communities may have more experience than the Company’s management. Moreover, single-family rental housing, manufactured housing, condominiums and the new and existing home markets provide housing alternatives to potential residents of apartment communities.

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Apartment communities compete on the basis of monthly rent, discounts, and facilities offered such as apartment size and amenities, and apartment community amenities, including recreational facilities, resident services, and physical property condition. The Company makes capital improvements to both the Communities and individual apartments on a regular basis in order to maintain a competitive position in each individual market.

ENVIRONMENTAL MATTERS

As part of the acquisition process, the Company generally obtains environmental studies on all of its Communities from various outside environmental engineering firms. The purpose of these studies is to identify potential sources of contamination at the Communities and to assess the status of environmental regulatory compliance. These studies generally include historical reviews of the Communities, reviews of certain public records, preliminary investigations of the sites and surrounding properties, visual inspection for the presence of asbestos, PCBs and underground storage tanks and the preparation and issuance of written reports. Depending on the results of these studies, more invasive procedures, such as soil sampling or ground water analysis, will be performed to investigate potential sources of contamination. These studies must be satisfactorily completed before the Company takes ownership of an acquisition property, however, no assurance can be given that the studies identify all significant environmental problems.

Under various Federal, state and local laws and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on properties. Such laws often impose such liability without regard to whether the owner caused or knew of the presence of hazardous or toxic substances and whether or not the storage of such substances was in violation of a resident’s lease. Furthermore, the cost of remediation and removal of such substances may be substantial, and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner’s ability to sell such real estate or to borrow using such real estate as collateral.

The Company is aware of environmental concerns specifically relating to potential issues resulting from mold in residential properties and has in place an active management and preventive maintenance program that includes procedures specifically related to mold. The Company has established a policy requiring residents to sign a mold addendum to lease. The Company has also purchased a $2 million insurance policy that covers remediation and exposure to mold. The current policy expires in 2007, but is renewable at that time. The Company, therefore, believes that its exposure to this issue is limited and controlled.

The environmental studies received by the Company have not revealed any material environmental liabilities. The Company is not aware of any existing conditions that would currently be considered an environmental liability. Nevertheless, it is possible that the studies do not reveal all environmental liabilities or that there are material environmental liabilities of which the Company is unaware. Moreover, no assurance can be given concerning future laws, ordinances or regulations, or the potential introduction of hazardous or toxic substances by neighboring properties or residents.

The Company believes that its Communities are in compliance in all material respects with all applicable Federal, state and local ordinances and regulations regarding hazardous or toxic substances and other environmental matters.

RECENT DEVELOPMENTS

DISTRIBUTION.    In January 2005, the Company announced a quarterly distribution to common shareholders of $0.585 per share, which was paid on January 31, 2005.

ACQUISITIONS.    On February 18, 2005, the Company acquired two communities in the Atlanta-metro area situated on Lake Lanier with a total of 657 units. The Company plans to operate the communities as one property.

ITEM 2.     PROPERTIES

The Company seeks to acquire apartment communities located in the southeastern United States and Texas that are primarily appealing to middle income residents with the potential for above average growth and return on investment. Approximately 75% of the Company’s apartment units are located in Georgia, Florida,

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   Tennessee and Texas markets. The Company’s strategic focus is to provide its residents high quality apartment units in attractive community settings, characterized by extensive landscaping and attention to aesthetic detail. The Company utilizes its experience and expertise in maintenance, landscaping, marketing and management to effectively “reposition” many of the apartment communities it acquires to raise occupancy levels and per unit average rents.

The following table sets forth certain historical information for the Communities the Company owned or maintained an ownership interest in, including the 3 properties containing 1,286 apartment units owned by the Company’s Joint Ventures, at December 31, 2004:

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 		      Encumbrances at
December 31, 2004
     
Property
          Location
      Year
Completed
      Year
Management
Commenced
      Number
of Units
      Approximate
Rentable
Area
(Square
Footage)
      Average
Unit
Size
(Square
Footage)
      Monthly
Rent per
Unit at
December 31,
2004
      Average
Occupancy
Percent at
December 31,
2004
      Mortgage
Principal
(000’s)
      Interest
Rate
      Maturity
Date
100% Owned
               
 
                                                                                                                                                                                                        
Eagle Ridge
               
Birmingham, AL
           1986               1998               200               181,400              907            $ 662.15              98.50 %          $ — (1)             (1)             (1)  
Abbington Place
               
Huntsville, AL
           1987               1998               152               162,792              1,071           $ 540.79              87.50 %          $ — (1)             (1)             (1)  
Paddock Club Huntsville
               
Huntsville, AL
           1989/98              1997               392               414,736              1,058           $ 660.37              84.18 %          $ — (1)             (1)             (1)  
Paddock Club Montgomery
               
Montgomery, AL
           1999               1998               208               230,880              1,110           $ 730.36              91.35 %          $ — (1)             (1)             (1)  
 
               
 
                                           952               989,808              1,040           $ 656.94              89.29 %          $ —                                            
Calais Forest
               
Little Rock, AR
           1987               1994               260               195,000              750            $ 610.63              94.62 %          $ — (1)             (1)             (1)  
Napa Valley
               
Little Rock, AR
           1984               1996               240               183,120              763            $ 612.78              90.83 %          $ — (1)             (1)             (1)  
Westside Creek I
               
Little Rock, AR
           1984               1997               142               147,964              1,042           $ 693.55              90.14 %          $ — (1)             (1)             (1)  
Westside Creek II
               
Little Rock, AR
           1986               1997               166               172,972              1,042           $ 650.49              96.39 %          $ 4,591              8.760%              10/1/2006   
 
               
 
                                           808               699,056              865            $ 634.03              93.07 %          $ 4,591                                           
Tiffany Oaks
               
Altamonte Springs, FL
           1985               1996               288               234,144              813            $ 671.17              97.22 %          $ — (1)             (1)             (1)  
Marsh Oaks
               
Atlantic Beach, FL
           1986               1995               120               93,240              777            $ 652.50              95.00 %          $ — (1)             (1)             (1)  
Indigo Point
               
Brandon, FL
           1989               2000               240               194,640              811            $ 729.67              99.17 %          $ — (4)             (4)             (4)  
Paddock Club Brandon
               
Brandon, FL
           1997/99              1997               440               516,120              1,173           $ 877.41              95.00 %          $ — (2)             (2)             (2)  
Preserve at Coral Square
               
Coral Springs, FL
           1996               2004               480               528,480              1,101           $ 1,040.15              97.71 %          $ 33,141              6.983%              9/28/2008   
Anatole
               
Daytona Beach, FL
           1986               1995               208               149,136              717            $ 666.99              99.52 %          $ 7,000 (10)             1.770% (10)             10/15/2032 (10)  
Paddock Club Gainesville
               
Gainesville, FL
           1999               1998               264               293,040              1,110           $ 821.36              93.18 %          $ — (2)             (2)             (2)  
Cooper’s Hawk
               
Jacksonville, FL
           1987               1995               208               218,400              1,050           $ 768.53              99.04 %          $ — (6)             (6)             (6)  
Hunter’s Ridge at Deerwood
               
Jacksonville, FL
           1987               1997               336               295,008              878            $ 721.88              94.64 %          $ — (7)             (7)             (7)  
Lakeside
               
Jacksonville, FL
           1985               1996               416               344,032              827            $ 703.46              96.63 %          $ — (1)             (1)             (1)  
Lighthouse Court
               
Jacksonville, FL
           2003               2003               501               556,110              1,110           $ 932.43              88.42 %          $ — (1)             (1)             (1)  
Paddock Club Jacksonville
               
Jacksonville, FL
           1989/96              1997               440               475,200              1,080           $ 811.79              92.50 %          $ — (1)             (1)             (1)  
Paddock Club Mandarin
               
Jacksonville, FL
           1998               1998               288               330,336              1,147           $ 843.10              94.79 %          $ — (2)             (2)             (2)  
St. Augustine
               
Jacksonville, FL
           1987               1995               400               304,400              761            $ 639.07              89.25 %          $ — (6)             (6)             (6)  
Woodbridge at the Lake
               
Jacksonville, FL
           1985               1994               188               166,004              883            $ 692.12              95.74 %          $ — (2)             (2)             (2)  
Woodhollow
               
Jacksonville, FL
           1986               1997               450               342,000              760            $ 705.36              93.78 %          $ — (1)             (1)             (1)  
Paddock Club Lakeland
               
Lakeland, FL
           1988/90              1997               464               505,296              1,089           $ 719.85              95.47 %          $ — (1)             (1)             (1)  
Savannahs at James Landing
               
Melbourne, FL
           1990               1995               256               238,592              932            $ 691.53              97.27 %          $ — (6)             (6)             (6)  
Paddock Park Ocala
               
Ocala, FL
           1986/88              1997               480               485,280              1,011           $ 729.64              93.96 %          $ 6,805 (2)(3)             (2)(3)             (2)(3)  
Paddock Club Panama City
               
Panama City, FL
           2000               1998               254               283,972              1,118           $ 870.39              96.85 %          $ — (2)             (2)             (2)  
Paddock Club Tallahassee
               
Tallahassee, FL
           1990/95              1997               304               329,232              1,083           $ 808.02              83.22 %          $ — (2)             (2)             (2)  
Belmere
               
Tampa, FL
           1984               1994               210               202,440              964            $ 736.68              92.38 %          $ — (1)             (1)             (1)  
Links at Carrollwood
               
Tampa, FL
           1980               1998               230               214,820              934            $ 753.65              96.09 %          $ — (1)             (1)             (1)  
 
               
 
                                           7,465              7,299,922              978            $ 778.17              94.27 %          $ 46,946                                           
High Ridge
               
Athens, GA
           1987               1997               160               186,560              1,166           $ 683.40              96.25 %          $ — (1)             (1)             (1)  
Bradford Pointe
               
Augusta, GA
           1986               1997               192               156,288              814            $ 611.01              91.67 %          $ 4,760              2.739%              6/1/2028   
Shenandoah Ridge
               
Augusta, GA
           1982               1994               272               222,768              819            $ 543.93              95.96 %          $ — (1)             (1)             (1)  
Westbury Creek
               
Augusta, GA
           1984               1997               120               107,040              892            $ 632.48              91.67 %          $ 3,480 (15)             1.770% (15)             5/15/2033 (15)  
Fountain Lake
               
Brunswick, GA
           1983               1997               110               129,800              1,180           $ 744.26              85.45 %          $ — (5)             (5)             (5)  
Park Walk
               
College Park, GA
           1985               1997               124               112,716              909            $ 646.27              91.94 %          $ — (1)             (1)             (1)  
Whisperwood
               
Columbus, GA
           1980/82/
84/86/98		              1997               1,008              1,220,688              1,211           $ 718.96              95.24 %          $ — (1)             (1)             (1)  
Willow Creek
               
Columbus, GA
           1971/77              1997               285               246,810              866            $ 567.88              88.42 %          $ — (1)             (1)             (1)  
Terraces at Fieldstone
               
Conyers, GA
           1999               1998               316               351,076              1,111           $ 749.93              96.84 %          $ — (1)             (1)             (1)  
Prescott
               
Duluth, GA
           2001               2004               384               370,176              964            $ 878.05              96.88 %          $ — (8)             (8)             (8)  

8



 		         
 		      Encumbrances at
December 31, 2004
     
Property
          Location
      Year
Completed
      Year
Management
Commenced
      Number
of Units
      Approximate
Rentable
Area
(Square
Footage)
      Average
Unit
Size
(Square
Footage)
      Monthly
Rent per
Unit at
December 31,
2004
      Average
Occupancy
Percent at
December 31,
2004
      Mortgage
Principal
(000’s)
      Interest
Rate
      Maturity
Date
Whispering Pines
               
LaGrange, GA
           1982/84              1997               216               223,128              1,033           $ 542.25              90.74 %          $ — (5)             (5)             (5)  
Westbury Springs
               
Lilburn, GA
           1983               1997               150               137,700              918            $ 658.04              93.33 %          $ — (1)             (1)             (1)  
Austin Chase
               
Macon, GA
           1996               1997               256               292,864              1,144           $ 697.21              94.53 %          $ — (7)             (7)             (7)  
The Vistas
               
Macon, GA
           1985               1997               144               153,792              1,068           $ 605.78              99.31 %          $ — (1)             (1)             (1)  
Walden Run
               
McDonough, GA
           1997               1998               240               271,200              1,130           $ 721.03              95.00 %          $ — (1)             (1)             (1)  
Georgetown Grove
               
Savannah, GA
           1997               1998               220               239,800              1,090           $ 821.88              96.36 %          $ 10,174              7.750%              7/1/2037   
Wildwood
               
Thomasville, GA
           1980/84              1997               216               223,128              1,033           $ 567.42              96.30 %          $ — (1)             (1)             (1)  
Hidden Lake
               
Union City, GA
           1985/87              1997               320               342,400              1,070           $ 666.02              93.13 %          $ — (1)             (1)             (1)  
Three Oaks
               
Valdosta, GA
           1983/84              1997               240               247,920              1,033           $ 613.68              89.58 %          $ — (1)             (1)             (1)  
Huntington Chase
               
Warner Robins, GA
           1997               2000               200               218,400              1,092           $ 673.33              96.00 %          $ 9,031              6.850%              11/1/2008   
Southland Station
               
Warner Robins, GA
           1987/90              1997               304               354,768              1,167           $ 677.27              98.68 %          $ — (1)             (1)             (1)  
Terraces at Townelake
               
Woodstock, GA
           1999               1998               502               575,794              1,147           $ 704.22              94.02 %          $ — (1)             (1)             (1)  
 
               
 
                                           5,979              6,384,816              1,068           $ 683.34              94.41 %          $ 27,445                                           
Fairways at Hartland
               
Bowling Green, KY
           1996               1997               240               251,280              1,047           $ 637.02              98.33 %          $ — (1)             (1)             (1)  
Paddock Club Florence
               
Florence, KY
           1994               1997               200               207,000              1,035           $ 703.11              96.50 %          $ 9,666              5.875%              1/1/2044   
Grand Reserve Lexington
               
Lexington, KY
           2000               1999               370               432,530              1,169           $ 815.54              91.35 %          $ — (1)             (1)             (1)  
Lakepointe
               
Lexington, KY
           1986               1994               118               90,624              768            $ 619.18              93.22 %          $ — (1)             (1)             (1)  
Mansion, The
               
Lexington, KY
           1989               1994               184               138,736              754            $ 617.21              94.57 %          $ — (1)             (1)             (1)  
Village, The
               
Lexington, KY
           1989               1994               252               182,700              725            $ 598.86              89.68 %          $ — (1)             (1)             (1)  
Stonemill Village
               
Louisville, KY
           1985               1994               384               324,096              844            $ 607.17              92.19 %          $ — (1)             (1)             (1)  
 
               
 
                                           1,748              1,626,966              931            $ 667.02              93.31 %          $ 9,666                                           
Riverhills
               
Grenada, MS
           1972               1985               96               81,984              854            $ 407.41              97.92 %          $ — (1)             (1)             (1)  
Crosswinds
               
Jackson, MS
           1988/90              1996               360               443,160              1,231           $ 668.89              94.72 %          $ — (1)             (1)             (1)  
Pear Orchard
               
Jackson, MS
           1985               1994               389               338,430              870            $ 624.79              95.89 %          $ — (1)             (1)             (1)  
Reflection Pointe
               
Jackson, MS
           1986               1988               296               254,856              861            $ 639.96              96.62 %          $ 5,880 (11)             1.770% (11)             5/15/2031 (11)  
Somerset
               
Jackson, MS
           1981               1995               144               126,864              881            $ 581.16              95.14 %          $ — (1)             (1)             (1)  
Woodridge
               
Jackson, MS
           1987               1988               192               175,104              912            $ 564.30              96.88 %          $ — (1)             (1)             (1)  
Lakeshore Landing
               
Ridgeland, MS
           1974               1994               196               171,108              873            $ 586.41              94.90 %          $ — (1)             (1)             (1)  
Savannah Creek
               
Southaven, MS
           1989               1996               204               237,048              1,162           $ 663.88              94.61 %          $ — (1)             (1)             (1)  
Sutton Place
               
Southaven, MS
           1991               1996               253               268,686              1,062           $ 649.85              92.89 %          $ — (1)             (1)             (1)  
 
               
 
                                           2,130              2,097,240              985            $ 619.34              95.35 %          $ 5,880                                           
Hermitage at Beechtree
               
Cary, NC
           1988               1997               194               169,750              875            $ 601.47              95.36 %          $ — (1)             (1)             (1)  
Woodstream
               
Greensboro, NC
           1983               1994               304               217,056              714            $ 530.83              96.05 %          $ — (1)             (1)             (1)  
Corners, The
               
Winston-Salem, NC
           1982               1993               240               173,520              723            $ 538.55              94.58 %          $ — (2)             (2)             (2)  
 
               
 
                                           738               560,326              759            $ 551.91              95.39 %          $ —                                            
Fairways at Royal Oak
               
Cincinnati, OH
           1988               1994               214               214,428              1,002           $ 672.94              90.65 %          $ — (1)             (1)             (1)  
Colony at South Park
               
Aiken, SC
           1989/91              1997               184               174,800              950            $ 660.86              94.57 %          $ — (1)             (1)             (1)  
Woodwinds
               
Aiken, SC
           1988               1997               144               165,168              1,147           $ 625.60              95.14 %          $ — (1)             (1)             (1)  
Tanglewood
               
Anderson, SC
           1980               1994               168               146,664              873            $ 554.50              95.24 %          $ — (1)             (1)             (1)  
Fairways, The
               
Columbia, SC
           1992               1994               240               213,840              891            $ 589.75              93.75 %          $ 7,735 (12)             1.809% (12)             5/15/2031 (12)  
Paddock Club Columbia
               
Columbia, SC
           1989/95              1997               336               367,584              1,094           $ 702.03              91.96 %          $ — (1)             (1)             (1)  
Highland Ridge
               
Greenville, SC
           1984               1995               168               143,976              857            $ 488.97              97.02 %          $ — (9)             (9)             (9)  
Howell Commons
               
Greenville, SC
           1986/88              1997               348               292,668              841            $ 501.60              90.80 %          $ — (1)             (1)             (1)  
Paddock Club Greenville
               
Greenville, SC
           1996               1997               208               212,160              1,020           $ 657.71              92.31 %          $ — (1)             (1)             (1)  

9



 		         
 		      Encumbrances at
December 31, 2004
     
Property
          Location
      Year
Completed
      Year
Management
Commenced
      Number
of Units
      Approximate
Rentable
Area
(Square
Footage)
      Average
Unit
Size
(Square
Footage)
      Monthly
Rent per
Unit at
December 31,
2004
      Average
Occupancy
Percent at
December 31,
2004
      Mortgage
Principal
(000’s)
      Interest
Rate
      Maturity
Date
Park Haywood
               
Greenville, SC
           1983               1993               208               156,832              754            $ 505.10              100.00 %          $ — (1)             (1)             (1)  
Spring Creek
               
Greenville, SC
           1985               1995               208               182,000              875            $ 495.17              99.52 %          $ — (9)             (9)             (9)  
Runaway Bay
               
Mt. Pleasant, SC
           1988               1995               208               177,840              855            $ 758.58              98.56 %          $ — (9)             (9)             (9)  
Park Place
               
Spartanburg, SC
           1987               1997               184               195,224              1,061           $ 601.56              90.76 %          $ — (1)             (1)             (1)  
 
               
 
                                           2,604              2,428,756              933            $ 596.12              94.59 %          $ 7,735                                           
Hamilton Pointe
               
Chattanooga, TN
           1989               1992               361               256,671              711            $ 519.19              95.57 %          $ — (1)             (1)             (1)  
Hidden Creek
               
Chattanooga, TN
           1987               1988               300               259,200              864            $ 540.94              90.00 %          $ — (1)             (1)             (1)  
Steeplechase
               
Chattanooga, TN
           1986               1991               108               98,604              913            $ 612.69              93.52 %          $ — (1)             (1)             (1)  
Windridge
               
Chattanooga, TN
           1984               1997               174               238,728              1,372           $ 702.24              96.55 %          $ 5,465 (16)             1.770% (16)             5/15/2033 (16)  
Oaks, The
               
Jackson, TN
           1978               1993               100               87,500              875            $ 556.77           &